When most business owners consider securing financing, they typically focus on tangible assets, including equipment, property, and inventory. But in today’s economy, the most valuable assets are often invisible. Intangible assets, such as brand reputation, patents, proprietary technology, and customer data, make up about 90% of the value of S&P 500 companies, according to Ocean Tomo’s 2024 IP valuation report. Yet these assets are rarely used as leverage for funding.
As financing markets evolve and lenders look beyond bricks and mortar, understanding how to unlock the value of your intangibles is becoming essential, not just for big tech firms, but for any entrepreneur committed to building with intention rather than inertia.
Why Intangibles Are Hard to Finance, and Why That’s Changing
Intangible assets fuel modern business growth, but traditional financing systems often overlook them. Unlike property or inventory, intangibles don’t appear on balance sheets in a way that banks can easily collateralize. This has historically made them difficult to value, insure, or recover in the event of default.
Yet momentum is building. The World Intellectual Property Organization (WIPO) reports that global IP-backed financing grew by double digits in 2024. In China, for example, IP-secured loans reached a value of approximately $58 billion in the first half of 2024 alone. In the UK, NatWest provided a £700,000 loan to Sci-Net, using its intellectual property as collateral, which allowed the firm to scale without having to pledge physical assets.
What’s driving this change? A recognition that in the digital age, value lies not in what you can touch, but in what you can protect, monetize, and scale. As WIPO and other global bodies push for standardized valuation and reporting of IP, lenders are becoming more comfortable extending credit against these hidden strengths.
Why Intellectual Property Deserves Asset-Level Attention
While intangible asset financing is gaining momentum, intellectual property — patents, trademarks, copyrights, and proprietary technologies — stands out as one of the most underutilized forms of business capital. Increasingly, financial institutions, private equity firms, and lenders are recognizing IP not just as a form of legal protection, but as a measurable and monetizable asset. A 2024 report from the World Intellectual Property Organization (WIPO) highlighted that companies with formal IP valuation and protection strategies outperformed their peers in both access to financing and resilience during economic downturns.
The shift reflects a broader rethinking of value creation in modern businesses. According to the OECD’s Measuring the Digital Transformation report, IP and other intangibles often contribute more to a company's market valuation than its physical assets. When these rights are clearly defined, documented, and protected, they can be used in negotiations for loans, serve as collateral for credit lines, or even underpin securitized funding arrangements.
Importantly, this evolution requires business owners to view IP not as an afterthought or legal formality, but as core capital that requires the same strategic planning as real estate or equipment. It means tracking its value, ensuring enforceability, and integrating it into long-term financial design.
The Opportunities and Risks of Intangible Asset Finance
For business owners, leveraging the value of intangibles presents compelling advantages. It can open access to new funding without diluting equity. It can reduce reliance on asset-heavy balance sheets, freeing up flexibility for growth. And it can demonstrate resilience to investors: the American Institute of CPAs (AICPA) has found that firms with documented IP governance and formal valuation practices are 30% more likely to secure favorable financing terms.
But the path isn’t without challenges. Valuing intangibles accurately is complex. There is still no universal framework, which means that due diligence takes time and incurs costs. Liquidity is another concern: if a loan defaults, lenders face difficulties recovering value from intellectual property (IP) compared to, say, seizing a building. And there’s litigation risk: U.S. SMEs involved in IP lawsuits face average damages of $3.8 million, according to SECerna’s 2024 analysis.
As Dan often points out, clarity before action is key. The goal isn’t just to access capital, but to ensure that funding structures align with your solvable problem and long-term strategy.
Designing Your Approach to IP-Backed Finance
So, how can business owners translate these opportunities into smart action?
Start with documentation. Inventory your intangible assets — patents, trademarks, trade secrets, software, proprietary processes. If you’ve never formally valued them, work with credentialed IP valuation experts or trusted platforms like Aon’s IP analytics tool. The process not only clarifies worth but also prepares you for lender discussions.
Align financing with milestones. For example, IP-backed loans might support product launches, market expansion, or bridge financing ahead of a funding round. As Aon notes, having a clear purpose tied to business growth improves both terms and lender confidence.
Anticipate risks. Consider IP liability insurance to protect against infringement claims, and build contracts and documentation that strengthen your ownership position. Lenders will expect this level of governance, which will also protect your business.
And above all, engage the right team. Early involvement from legal, tax, and financial advisors ensures that you choose the right structures and avoid unintended tax or compliance consequences—pitfalls that, as Thomson Reuters found in its 2023 survey, affected 40% of firms attempting DIY conversions.
The Future of Financing Hidden Assets
The momentum behind intangible asset finance is real and growing. Banks like NatWest and HSBC, as well as fintech lenders, are rolling out IP-secured loan programs. WIPO, the UN, and OECD are collaborating on valuation and reporting standards to support these markets globally. And AI and blockchain technologies are emerging to make IP valuation faster, more consistent, and more liquid.
For business owners, this isn’t just a trend to watch. It’s a call to action to identify, protect, and leverage the value that may already sit inside their businesses — value that could fund the next stage of growth.
Conclusion
Intangible assets are no longer invisible on the financial landscape. With the right planning, they can become powerful tools for securing funding, building resilience, and achieving your business’s long-term vision. As Dan often says, intentional design—not luck—is what transforms hidden potential into certainty.
Sources
✅ Aon on intangible assets and risk management
https://www.aon.com/intellectual-property-solutions/intellectual-property-finance.jsp
✅ World Intellectual Property Organization (WIPO) on IP valuation and financing
https://www.wipo.int/sme/en/ip-valuation.html
✅ Harvard Business Review on the rise of intangible assets in business valuation
https://hbr.org/2020/01/why-intangible-assets-are-more-important-than-ever
✅ OECD on measurement and valuation of intangible assets
https://www.oecd.org/sti/intangible-asset-valuation.htm
✅ PwC on unlocking value from intangibles and data assets
https://www.pwc.com/gx/en/services/legal/intangible-assets.html
✅ Intellectual Property Office UK on IP-backed lending case studies
https://www.gov.uk/government/publications/ip-backed-finance-case-studies
✅ McKinsey & Company on financing innovation and IP-based business models
https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-value-of-intangibles
✅ European Investment Bank report on IP and innovation finance
https://www.eib.org/en/publications/ip-finance
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